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Regular version of the site
Bachelor 2020/2021

Game Theory

Area of studies: Business Informatics
When: 3 year, 3, 4 module
Mode of studies: offline
Open to: students of one campus
Instructors: Danil Fedorovykh
Language: English
ECTS credits: 4

Course Syllabus

Abstract

Game Theory is a discipline that studies how people make decisions in strategic situations—when their benefit depends on other decision-makers' actions. In this course, we will learn how people act in these situations and how to predict the outcomes of them. We will talk about individuals' strategising in static and dynamic situations, in repeated interactions and evolutionary framework. Understanding strategic situations involving conflict and/or cooperation has proved useful in many areas of economics, business, political science, law, and social psychology.
Learning Objectives

Learning Objectives

  • To enable students to use the analytical tools of game theory to study key strategic problems in decision making
Expected Learning Outcomes

Expected Learning Outcomes

  • Understanding the deferred acceptance algorithm.
  • Solving the games with incomplete information
  • Understanding the concept of ESS.
  • Solving infinitely repeated games.
  • Solving the games with imperfect information
  • Understanding the method of dominated strategies elimination.
  • Understanding Nash Equilibrium in pure strategies.
  • Understanding the concept of SPNE.
Course Contents

Course Contents

  • Prisoners' Dilemma and Strategic Dominance
    Definition of a game (in normal form), a strategy, an outcome. Dominant and dominated strategies, iterated elimination of dominated strategies. Rationalisability. Equilibrium and efficiency.
  • Solving Games
    Static games with complete information that cannot be solved by dominance. Best responses. Nash Equilibrium as a solution concept. Cautious strategies.
  • Benefits of Unpredictability
    Games with no pure-strategy equilibria. Mixed strategies and their justification. Application from sports. Behavioural aspects of applying mixed strategies.
  • Commitments and Credibility
    Games in extended form. Concepts of backward induction, a subgame, and subgame perfection. Credible and non-credible threats. Planner-doer model. Challenges to backward induction (centipede game, chain store paradox)
  • Imperfect Information
    Information sets. Revisiting subgames and subgame perfection.
  • Strategic Alliances
    Discounting. Finite and infinite repetition. Equilibria in repeated games. Applications in cartel models.
  • Stability in Evolution
    Evolutionary games. Evolutionary stability. Applications to markets.
  • Opponent as a Black Box
    Games with asymmetric information. Bayesian games and equilibrium. Cheap talk and signals. Auctions.
  • Matching
    Stable marriage problem. Deferred acceptance algorithm. Applications.
Assessment Elements

Assessment Elements

  • non-blocking Final Exam
    The final exam will consist of a few questions, both theoretical and applied. Students will be required to rigorously solve theoretical problems or to provide a verbal explanation of a phenomenon using the concepts studied in the course. Examination format: The exam is taken written (open-ended questions) with asynchronous proctoring/without proctoring. Asynchronous proctoring means that all the student's actions during the exam will be “watched” by the computer. The exam process is recorded and analyzed by artificial intelligence and a human (proctor). Please be careful and follow the instructions clearly! The platform: The exam is conducted on the StartExam platform. StartExam is an online platform for conducting test tasks of various levels of complexity. The link to pass the exam task will be available to the student in the RUZ. The computers must meet the following technical requirements 1. Desktop computer or laptop only (mobile devices are not supported); 2. Operating systems: Windows( v. 7, 8, 8.1, 10), Mac OS X Yosemite 10.10 and higher; 3. Google Chrome of the latest (by the day of the control) update (to download use the link: https://www.google.com/chrome/, to update follow chrome://help/ with browser version and the update button if available) or Yandex Browser of the latest update. 4. Network port data allowed: 80 TCP, 443 TCP, 3478 TCP/UDP (check it with your provider / select control panel – system and security – Miscrosoft Deneder Firewall – additional options. Make sure that your inbound and outbound connection is not limited). 5. Adjusted and turned on web-camera (including a laptop integrated one) 6. Adjusted and turned on microphone (including a laptop integrated one); 7. High-speed stable Internet access 5 Mbit/s and higher; it is not recommended to use mobile Internet access since technical failure and cutting off are highly likely to occur during proctoring control. 8. Your desktop computer or laptop must successfully complete verification which is available only after authorization. All students are expected to do their best to ensure their computers (laptops) meet all the requirements described above. A student is supposed to follow the requirements below (With proctoring): Prepare identification documents (а passport on a page with name and photo) for identification before the beginning of the examination task; Check your microphone, speakers or headphones, webcam, Internet connection (we recommend connecting your computer to the network with a cable, if possible); Prepare the necessary writing equipment, such as pens, pencils, pieces of paper, and others. Disable applications on the computer's task other than the browser that will be used to log in to the StartExam program. If one of the necessary requirements for participation in the exam cannot be met, a student is obliged to inform a program manager 7 days before the exam date to decide on the student's participation in the exams. Important rules: All rules are available in exam regulations using asynchronous proctoring technology in the framework of intermediate certification. Connection failures: A short-term connection failure during the exam is considered to be the loss of a student's network connection with the StartExam platform for no longer than 5 minutes per exam. A long-term connection failure during the exam is considered to be the loss of a student's network connection with the StartExam platform for longer than 5 minutes per exam and will be the basis for the decision to terminate the exam. In case of a long-term connection failure in the StartExam platform during the examination task, the student must record the fact of connection failure (screenshot, a response from the Internet provider). Then contact the program manager with an explanatory note about the incident to decide on retaking the exam.
  • non-blocking Midterm Exam
    The midterm exam will consist of a few questions, both theoretical and applied. Students will be required to rigorously solve theoretical problems or to provide a verbal explanation of phenomena using the concepts studied in the course. Examination format: The exam is taken written (open-ended questions) with asynchronous proctoring/without proctoring. Asynchronous proctoring means that all the student's actions during the exam will be “watched” by the computer. The exam process is recorded and analyzed by artificial intelligence and a human (proctor). Please be careful and follow the instructions clearly! The platform: The exam is conducted on the StartExam platform. StartExam is an online platform for conducting test tasks of various levels of complexity. The link to pass the exam task will be available to the student in the RUZ. The computers must meet the following technical requirements 1. Desktop computer or laptop only (mobile devices are not supported); 2. Operating systems: Windows( v. 7, 8, 8.1, 10), Mac OS X Yosemite 10.10 and higher; 3. Google Chrome of the latest (by the day of the control) update (to download use the link: https://www.google.com/chrome/, to update follow chrome://help/ with browser version and the update button if available) or Yandex Browser of the latest update. 4. Network port data allowed: 80 TCP, 443 TCP, 3478 TCP/UDP (check it with your provider / select control panel – system and security – Miscrosoft Deneder Firewall – additional options. Make sure that your inbound and outbound connection is not limited). 5. Adjusted and turned on web-camera (including a laptop integrated one) 6. Adjusted and turned on microphone (including a laptop integrated one); 7. High-speed stable Internet access 5 Mbit/s and higher; it is not recommended to use mobile Internet access since technical failure and cutting off are highly likely to occur during proctoring control. 8. Your desktop computer or laptop must successfully complete verification which is available only after authorization. All students are expected to do their best to ensure their computers (laptops) meet all the requirements described above. A student is supposed to follow the requirements below (With proctoring): Prepare identification documents (а passport on a page with name and photo) for identification before the beginning of the examination task; Check your microphone, speakers or headphones, webcam, Internet connection (we recommend connecting your computer to the network with a cable, if possible); Prepare the necessary writing equipment, such as pens, pencils, pieces of paper, and others. Disable applications on the computer's task other than the browser that will be used to log in to the StartExam program. If one of the necessary requirements for participation in the exam cannot be met, a student is obliged to inform a program manager 7 days before the exam date to decide on the student's participation in the exams. Important rules: All rules are available in exam regulations using asynchronous proctoring technology in the framework of intermediate certification. Connection failures: A short-term connection failure during the exam is considered to be the loss of a student's network connection with the StartExam platform for no longer than 5 minutes per exam. A long-term connection failure during the exam is considered to be the loss of a student's network connection with the StartExam platform for longer than 5 minutes per exam and will be the basis for the decision to terminate the exam. In case of a long-term connection failure in the StartExam platform during the examination task, the student must record the fact of connection failure (screenshot, a response from the Internet provider). Then contact the program manager with an explanatory note about the incident to decide on retaking the exam.
  • non-blocking In-class quizzes
    Homeworks will be provided after the seminar classes devoted to solving theoretical questions. Students may solve the questions individually or in groups, nothing has to be submitted for grading. Some seminar classes will start with short tests (not announced in advance) which will be similar to questions from the latest homework. Students will have to provide solutions that will be graded.
Interim Assessment

Interim Assessment

  • Interim assessment (4 module)
    0.4 * Final Exam + 0.3 * In-class quizzes + 0.3 * Midterm Exam
Bibliography

Bibliography

Recommended Core Bibliography

  • An introduction to game theory, Osborne, M. J., 2009
  • Game theory for applied economists, Gibbons, R., 1992

Recommended Additional Bibliography

  • A course in game theory, Osborne, M. J., Rubinstein, A., 1994
  • Game theory : a very short introduction, Binmore, K., 2007
  • Game theory, Maschler, M., Solan, E., 2013
  • Playing for real : a text on game theory, Binmore, K., 2007
  • Two-sided matching: a study in game-theoretic modeling and analysis, Roth, A.E., Oliveira Sotomayor, M.A., 1992